A typical scene in a rural mainland hospital. Beijing plans more hospitals as part of a US$125 billion three-year effort.Photo: Reuters

A battle over market share in the mainland often plays out in a scenario that pits home-grown companies churning out affordable, low-end products against foreign rivals enjoying bumper sales with established brands.

But Hu Hai, chief executive of TCL Healthcare, said that while mainland companies usually played the underdog role in competition with big global names they were slowing catching up.

One area in which they are exuding more confidence and shaking up their foreign rivals' monopolies is the more than 20 billion yuan (HK$24.4 billion) diagnostic imaging equipment sector.

For Hu the decision to join TCL Group, a mainland consumer electronics group, had an emotional motivation.

"China's medical equipment market has been dominated by foreign brands for 30 years," he said. "For me, there has been a thirst to feel the nationalistic pride of churning out our own products."

TCL Healthcare, a joint venture between TCL and China-focused private-equity group HAO Capital, was the first mainland company to start competing in the hi-tech diagnostic imaging equipment sector which encompasses X-ray, ultrasound, CT and MRI devices.

Hao Capital made its investment into TCL Healthcare in July via its investment platform SKR which is headed by Chih Chen, a 30-year veteran of the health-care industry and former president of health-care businesses in China for General Electric (GE). Hu was also a former executive with GE health care.

China's diagnostic imaging market is valued at 22 billion yuan and it is expected to record an annualised 20 per cent growth in the next few years.

Hu said TCL Healthcare aimed to achieve sales of 2 billion yuan in five years, making it one of the major competitors in a market which is controlled by GE, Siemens, Phillips and Toshiba.

A team of high-calibre professionals and financially strong investors could pave the way to the success of a domestic brand, he added.

Core technologies in imaging devices are in the hands of the giant foreign rivals but TCL Healthcare is unconcerned, hoping to catch up with them via overseas acquisitions of technological innovations and start-ups.

"If we are able to sniff out new trends in technological developments, we will be able to acquire the most advanced technologies to meet fresh demand for equipment," Hu said. "It just takes time to establish a brand recognised by clients."

China's medical equipment has received a massive boost with Beijing determined to hugely expand health-care facilities, and unveiling plans to build more hospitals as part of a US$125 billion three-year effort to expand health-insurance coverage.

"The penetration rate of medical equipment in China is still low," said Elaine Wong, a partner and co-founder of Hao Capital. "The demand will be ever-increasing and TCL Healthcare will be doing its own job to make suitable products for Chinese hospitals."

By the end of last year, 108 private equity funds managing a combined US$120 billion of assets were focusing on investments in China's medical sectors, according to fund consultancy Zero2IPO.

This article appeared in the South China Morning Post print edition as TCL challenges the big-name operators